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Do payments received under a Qualified Term Care Policy

Customer Question
Second opinion] Do payments received...
Second opinion] Do payments received under a Qualified Long Term Care Policy reduce the amount paid for medical expenses deducted for Federal IncomeJA: The Accountant will know how to help. Please tell me more, so we can help you best.Customer: Tax purposesJA: Is there anything else important you think the Accountant should know?Customer: No Policy Holder is incapacitated and receiving payments for her care worker who is paid directly by the policy holder
Submitted: 1 month ago.Category: Tax
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Customer reply replied 1 month ago
IRS states that payments received from a non diem Qualified Long Term Care Policy are not deemed income for tax purposes. This seems to conflict with other IRS provisions that state reimbursement for medical expenses need to reduce the amount of medical expenses deducted under Schedule A. Can the payments received under a LTC Policy be deemed not to be reimbursements for paid medical expenses as otherwise they would in effect be taxable if used to reduce the medical expense deduction. Payments from LTC policy are being made to an incapacitated 85 year old who pays her health care aid directly and then receives funds from her LTC Policy for the amounts she pays.
Customer reply replied 1 month ago
Is anyone working on second opinion?
Answered in 21 hours by:
3/23/2018
Tax Professional: Barbara, Enrolled Agent replied 1 month ago
Barbara
Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 5,807
Experience: 20+ years of experience in tax preparation; 30+ years of experience as a real estate/corporate paralegal.
Verified

Welcome to Just Answer. My name is ***** ***** I will be happy to provide you with a second opinion.

ANY REIMBURSEMENT of medical expenses reduces the amount that can be claimed as a medical expense.

If the Qualified Long Term Care Policy is not considered income, and the medical expenses that it paid for were also deducted, that would be a form of double dipping.

The taxpayer would be receiving the benefit of non-taxable income and then turning around and deducting expenses for which he/she has already been reimbursed.

Please let me know if I can assist you further.

Thank you and best regards,

Barb

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